In case folks hold this, I didn’t see the results posted so here goes…
The YoY growth rates look very high - in the triple digits, although are certainly declining, net retention rates are also very high triple digits and are near their all time high and they have maintained margin well.
Country and product expansion has continued in LatAm, MEA and SE Asia. (Apparently it takes 3-6 quarters for country activation to really fully monetise although they tend to activate countries with a readily available customer in the wings).
QoQ rates have really dropped back though and I think I’m seeing that at 11% in latest Q3 to Q4. This really needs to be addressed otherwise growth is going to go from triple digits to mid double digits pretty quickly.
The guidance calls for NRR to average 150% for the full year 2022 and EBITDA margin to remain above 35%
Full Year 2021
US$6.0 billion Total Payment Volume, up 193% year-over-year
Revenues of US$244.1 million, up 134% year-over-year
219% Net Retention Rate
41% Adj EBITDA Margin
Fourth Quarter 2021
US$1.9 billion Total Payment Volume, up 145% year-over-year
Revenues of US$76.3 million, up 120% year-over-year
198% Net Retention Rate
38% Adj EBITDA Margin
Results:
https://seekingalpha.com/pr/18709050-dlocal-limited-reports-…
Earnings Call Transcript
https://seekingalpha.com/article/4495668-dlocal-limited-dlo-…
Ant
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Ant,
I feel you should be alarmed by the results if you are a shareholder. The triple-digit YoY growth rates are misleading. Q3 results were not great (16% QoQ growth) and Q4 results confirm the decline (11% QoQ growth).
A couple additional things I don’t like about the company:
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High concentration of merchants in revenue (In 2020, top 10 merchants represented 64% of revenue.)
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As merchants put more payment volume through DLocal’s system, the take rate decreases. This explains the decline in non-GAAP gross profit margin over the past 3 years (64.9% in FY2019, 57.7% in 2020 and 53.4% in 2021).
Cedric
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I just noticed TPV was only up 2% QoQ. Another disappointing metric.
Hi Cedric - they addressed the take rate issue in the conference call and the customer (merchant) concentration is high but improving. The QoQ growth rates are the real issue here as I see it.
Ant
Hi Cedric,
Thanks for the information but I think it is to early to tell. Yes they went from 16% sequentially to 11% sequentially this quarter but they went from 122 percent YOY to 120% YOY. If they stay at over 100 percent growth I will be very happy. If you listened to their conference call they said their Take Rate fluctuates. Here is one of the statements: “It is an output based on business mix, volume per merchant and volume-based pricing tiers for merchants with increasing volumes.” So yes volume is on of the inputs but not the only one. If you read the conference call you will see that they do not run their business by take rate. It isn’t an input but an output. Their GM’s did tick up this quarter and so did their Operating Margins. This company is not only growing fast but is also profitable.
Andy
This quarter, they somehow increased the take rate a bit from 3.8% last quarter to 4.1% this quarter and that’s the only good point I could get out of this report.
The revenue is only 11% QoQ down from 16% from last quarter. More alarming is TPV only at 1.9B, a mere 2% QoQ. In the transcript, they said, “we have the seasonal short-term marketing campaigns from short video social media companies that did a strong investment in those periods in Latin America and they are reducing these investments”. I hope it is only a hiccup, but that also means their customer concentration is pretty bad.
I could not find their guidance in their press release but somehow, this tweet says they guided for only 68% rev YoY for 2022. With the current NRR at 198%, that guidance is a bit weak in my opinion. The reason might be because they expect the NRR is going to 150%+ for the whole year.
I remember when SNOW guide for 66% YoY for next year at 178% NRR, nobody really cared. I guess we can also assume that DLO is sandbagging as well.
(https://twitter.com/jiggycapital/status/1503438840865902602)
I could not find their guidance in their press release but somehow, this tweet says they guided for only 68% rev YoY for 2022. With the current NRR at 198%, that guidance is a bit weak in my opinion. The reason might be because they expect the NRR is going to 150%+ for the whole year.
They said in the call weren’t giving guidance, (beyond NRR and margin), as they are going to be holding an investor meeting shortly (within days/weeks) and will disclose more financial information at that point.
Ant
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